good morning. another solid gain for the dow as the march through 14,000 continues while the bulls take another run at 1500 on the s&p. vin esters reaction to results from microsoft, at&t and starbucks and p&g is on the way. and ecb president mario draghi making news in the mountains. you know where that is, in davos. it's january 25th, 2013, and "squawk box" begins right now.

good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen. andrew ross sorkin is in davos for the world economic forum, good morning, andrew. >> good morning, becks, how are you? >> great. >> we're going to have you come back here next time. >> i don't know. it's cold there. you're doing a great job. >> isn't it colder where you are than it is here? >> it is, but we're inside. we're inside so you're the one who is really toughing things out out there. >> what was that call that you did to him? >> yodel lay-he-hoo. >> what were the calls they did for you? ricola! >> oh, yeah. ricola! >> maybe not. that's a product, isn't it? >> it is, but it has the swiss flag thing on it, too. >> andrew, those long underwear, how many pairs did they send you?

let us know what we're dealing with here. are you wearing the same crusty pair at this point? >> no. i've got different pairs for each day. i have the tommy johnes and they are keeping me very, very warm. i can't believe we talk about long underwear on this show. >> why? you're out in the cold. >> but i'll tell you one thing about these things. we talk about undershirts. they things keep me warm outside but not too warm inside. >> that's amazing. >> and they breathe, obviously. they breathe. yeah, you don't want to get to -- being cold in that area, being hot is almost just as bad as being cold. so it's -- you know what it sounds like, andrew? it sounds like you've almost got a thermos that you're wearing. >> a what? >> a thermos. it keeps things hot, keeps things cold, how does it know? it keeps you just right. you're outside, you're not cold. you're inside, you're things

aren't hot. it's a good. >> it's a perfect situation. you should -- do you want to do some news? >> let's talk real quickly a couple of numberes and then we'll get back. we want to tell people real quickly -- yeah, i think he does. we want to tell people about the markets. the dow jones industrial average has been pinching closer to 14,000 and to another all-time high despite the negative sentiment from apple yesterday. the index managed to post a 46-point gain. it closed at 13,825. the s&p 500 did manage to top 1500 before pulling back slightly. but by the way, this is the first time it's had a seven-day winning streak since october 2006. and i think the dow must be up ten on out of 11 days. take a look at futures this morning. slightly higher, up by 6 on points, s&p up by over 6 points. >> another big morning from earnings. we're expecting reports from procter & gamble, kimberly-clark

and more. i've very impressed with what we saw in terms of apple. microsoft's second quarter profit fell nearly 4% on weaker sales and business entertainment division. but sales of its new windows 8 operating testimony did get you have to a new saturday sa. the surface tablet helped drive an 11% revenue growth for pcs. microsoft will launch a new version of office this morning. now, microsoft just about owns the price 27. here is a -- they basically have said, listen, we are going to trade at 27 and anything we do, dividends, special dividends, windows one, two, three, four, five, six, anything we do is not going to budge our stock, so we're going to buy 27 and just keep it. here is the earnings for the last -- since 2009, becky.

$1.70, $2.10, 2.73, 2786. so everything year, it goes up. >> and the multiples get more and more compressed? >> i guess. you know what the revenue number is now? >> what? >> 80 billion. this kb can do 80 billion but it has been stuck. you remember the special dividend it did? >> you did see a trade up. >> it did. but, really, it's still a $232 billion company and that's all it is is 232 billion. >> why, do you think people are going to stick around, people -- >> it just is the law. i don't know what's. when it gets overloved and is people have been recommending -- remember on the way up people were saying, i don't like apple, i don't like google. i'm doing a spread because microsoft pays the dividend. the dividend is 3.3%. that's the kind of problem i think that these tech stocks grow to the sky.

people think it's a tree and it's going to grow like jack and the bean stock. still, how many times -- microsoft shares, $27. it's just has been there for so long. let's look at at&t. i don't know what that means for am. did you see the final straights yesterday in apple? >> though. >> like down 65, i think. i don't know. down around $450. and who knows what -- now, you read the commentary. >> there it is. netflix shares are worth more than apple the. >> what? >> i don't know. it says that company is going to be worth more. >> wow. >> no idea. this is you, you talking. >> at&t also out with its earnings yesterday. came in the fourth quarter loss. but when you exclude the items related to pension costs and to super storm sandy, the telecoms

are only at 44 cents a share. revenue and subscriber growth, they were better than expected as the company sold 8.6 million iphones. at&t pays a big subsidy after it sells. but over the long-term, they are expected these iphones to help things out. ceo randall stevensson says the company is eyes oversees growth opportunities. if you take a look at shares at at&t, that stock at this point trading at 33.75. >> at&t, that stock is a 5% yielder. 5.3%. let's get to andrew at the world economic forum. and he seemed like he was champing at the bit to get this news out. and i'm not really sure what -- >> it better be good. >> first of all, it's a busy day here in davos. we have a big show for you.

we have lloyd blank fine coming up at 8:00. those are the big things happen here on squawk. we also have. >> news for you, mario draghi making some comments that a lot of people are paying attention to this morning. an upbeat speech he gave, pretty optimistic. some people calling it a bit of a mystery lap, talking about a possibly recovery starting six months out from now. so we're going to see what that is all about and we're going to bring steve liesman in in just a mip. before we do that, i want to take a listen to what mario draghi had to say. >> the level of economic activity is in the process of stabilizing at very low levels. and we foresee a recovery for -- in the second part of the year. we can have a positive development if national governments will persevere in their actions. both in fiscal consolidation,

but especially now on the front of structural reforms. >> steve liesman is here with a little bit more on this, but you're not wearing long underwear. >> no. but i have any gloves on. >> you're a little cold. >> we've been standing out here for a while. what did you think of draghi? a lot of people here talking about it and i wonder whether it's going to ultimately move the market. >> there's a couple of things. he said the victory lap. he said we relaunched the euro in 2012. a lot of talk with chris at this teen legarde in europe today. 2015, talking about this growth in the back half. i think draghi's intentions today were not to mess things up. the general feeling here is that what the ecb has done with the current situation, perhaps created the underlying conditions for growth. >> i hosted a dinner with christine legarde last night. one of the things that came up

mario draghi said this morning that maybe we have good fall back into a problem again. >> well, that's a good question. but what we're hearing is this new buzz phrase out of davos, which is gsp. >> what is that? >> global stability put. i think larry summers may have been the one to coin this phrase. i heard it this morning when i met with a bunch of central bankers at a breakfast this morning. this phrase keeps coming up. the idea you have japan, you have the european central bank and you now have the fed obviously full throttle on monetary policy, underpinning and, you know, we meet here now in davos, there's nothing aflame right now. >> you went to dinner with george soros last night. >> i did. >> this is the real risk. what soros said and, obviously, he told maria the same thing was concerned about currency wars.

europe's big problem right now is the appreciate of the euro. japan is now full throttle on monetary policy, causing the yen to fall. and that creates, again, these big global issues, the concept we talked about for a long time where we talked about competitive devaluation where everybody tries to make their terms of trade the next issues for the big guy. that's the concern. >> real quick, i heard there was a clip last night from george soros in russia. sgledz putin is repressive. he said russia is weakening and he basically called on europe to enact those strong laws that the united states enacted when it comes to corruption officials traveling. >> steve liesman, thank you for that. you can see those interviews on cnbc.com. we have a lot more coming to you at 8:00 and other big interviews between now and then. >> andrea, has steve got an

ifbn? >> he does have an ifbn, yes. >> steve, hi. >> is this underwear or where is this going? >> no. you're not wearing underwear, but you're also not wearing a pajama shirt with a tie which is what andrew decided to go with today. >> i have a regular tie on. >> and how about that skirt which i like? >> andrew, are those pajamas? i don't know. it's one of those shirts. ben white, morning money. have you seen this yet? >> i did read morning money this morning. i saw my name in there. >> wait, wait, wait, spotted at the cnbc after party. jiemmy dimon, james gorman, gary cone, david bonderman, brian moynihan, steve liesman and lucas van prague. that's it. >> right. >> that's it. now -- >> and you want to know -- no,

no, no, you want to know why my name is so far down in that list. >> no, no, i don't. i want to know why you're the only person mentioned. i'll tell you why. they think after watching you for years that you're part of the government official, you're like part of the officials. you're like geithner. they don't even know you want for cnbc. they don't. >> right. >> how do you explain that? maria's name is not there, sorkin's name is not there, none of our normal people are there, but it's like holy schiz, steve liesman, he showed up here along with lucas von prague. >> as far as i know, joe, i was the only person daib dancing on a table last night. >> were you really? >> no. >> i mentioned that there was hard liquor over there. that they had hard liquor and -- >> no, becky, i wasn't of course. i was giving joe an opportunity to make another -- >> because i was a lamp shade.

>> ben weis did some investigative reporting and found out that it was me. >> i love that, though. jamie dimon, moynahan, gary kohn. >> these are my people here. >> they are. they are. and administration officials steve liesman. no. that's what i wanted to get in. that's what i was going to needle you about. you have close relationships with -- >> you did it. >> you do have close relationships with a lot of -- like the main people. >> way to go, steve, you made the list. >> i did. i made the list. that's cool, yes. >> did it -- >> you didn't want to ask about global financial stability or banking or regulation? you heard you doing stuff on regular hagz this morning, too big to fail. but -- >> boring. boring. yeah. the drum beat to death, 14,000 is getting louder. >> thank you, steve. thanks, steve. >> the index is up 10 of the last 11 sessions. the s&p 500 up seven session

necessary a row. will anything slow the bulls down? this guy is on every day. joining us from the cme in chicago, weren't you just on yesterday, jeff, in one of the shows in the afternoon? are you a contributor or you just work for them at this point? >> it feels like i wanted to work for him, but i wanted to get up early and spend the morning with you, joe. >> and you are the founder of kkm financial. the one thing i've noticed, and you've been watching the markets for a long time. if it gets more .more narrow, one day the only reason we were up was because of ibm. here we go again, it looks solid again today. do you suffice it to say that most of these numbers the companies are reporting are pretty solid and the back drop has gom got these claims numbers, the five-year low in unemployment claims and you're seeing a lot of, like, positive stuff happening, i guess, right? >> i'm not fully in that camp, joe.

we have seen about 59% of beating the estimate versus a typical 65%. but right now, we are seeing momentum, like you said. honestly, joe, as much as the bears want to see the s&p come back, the bulls want to see this come back. this is not healthy to have this continued momentum. it's literally like pop warner football. student body left, student body right. everything day, i think it's important and it's going be healthy to see some type of retraceme retracement. >> it sounds like you have been wrong to see the market go higher. now you have to somehow save your position. >> no. i don't want to pat myself on the back, but we've been targeting at 1505 on the suspect. we're about ten points away. this was prior to the debacle. >> and is you're going on record now as saying this was long in the tooth? >> yes, absolutely. i think we're caught up to this race in the base. we just saw mexico come out today. but i think the biggest thing in today's market movement is ecb's

margo draghi. history will decide, but he may surpass mick jagger in who is more powerful whiepd a microphone. >> who is this, draghi? does he have moves like jagger, that's the question. >> i don't know if he has moves like jagger, but the way he talks, we have seen him come to the markets with some serious tire power. the summer of 2010, we saw a dip. i think europe is slightly naive to see this continued momentum. there will be a pullback and we'll see how we deal with it. in chicago, we always say, you can talk the talk, but can you walk the walk? >> if we power through 1500 and the dow goes through its old highs, i'm going to come back to you and i'm going to remember. now you're saying it doesn't have much further to go. >> what have you done for me lately? i'm all about it. looking forward to it. >> thanks. >> when we come back, microsoft

opens the window on earnings. is this stock worth a second look right now? and later, we have more from the mountains. lloyd blankfein will be joining us. as well as sean parker. "squawk box" will be right back. you know how to mix business... with business. and you...rent from national.

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welcome back. u.s. equity futures up this hour about 49 points or so. we were up a little bit more earlier. a really good claims number yesterday. not sure what to attribute all this do. we'll talk to gouldsby about

jumging the economy. i don't know if he's good about -- >> he's been pretty spot on. >> but we're going to hear up some of the party line from him. i saw some of the stuff he says. we're going to find out why we're doing a little better and is whether it's going to continue. let's get the national forecast now. oh, my man is back, the weather channel's reynolds wolf. i told you that the last time. cold weather. >> that's right. >> climate change, snow climate change, no snow, climate change. any variability. and we know about weather over the years, over the millions and billions of years. we know that it never -- the median line is because of all this variability. so it goes like this and then we get to the middle. but now, anything that is not right on that middle average is now seen as, oh, something is happening. >> reynolds is going, what? >> no. he is with me. he knows exactly what i'm saying. every single thing is because of co2 emissions now, reynolds. >> i am just absorbing this.

i am just absorbing this. no, we have to talk, man, seriously. at some point, that is -- yes. anyway, let's -- you're getting me in big trouble here. this is very, very true. all right, my people, let me show what you we have. right now, about a third of the nation is going to be dealing with some winter precipitation or at least from frozing stuff on the ground the we're talking about rain, sleet, snow or ice. as we make our way to the nation's mid section, relatively quiet when you get to the north and central plains. southern plains, no problems at all. the world is your oyster. you don't have any problems. the pacific northwest, snow in the mountains. rain in the valleys. lowell vacation, we have warmer temperatures and still rain in los angeles with 65. are there some delays in the world for you today? in the world of air travel? i would say yes, there will be some delays. in fact, the delays that we anticipate will be in atlanta, moderate backups. charlotte and rally, my goodness, what a mess.

both places, you could get major backups. as we take a look at a few other airports, nashville, those could be tough in the city. then washington, d.c. and philadelphia, moderate backups due to snow showers moving through in the late day hours. early evening until about 6:00, 6:30, could become a problem. guys. >> i used to date some people, reynolds, and they would change a lot and i would say they change like the weather. what does that tell you? the weather has always changed. that's why we use that expression, isn't it? >> you always have -- you will always have natural fluctuations. if we were not here on this planet whatsoever, there would be changes, always some kind of a fluctuation. we have patterns. they do indeed happen. >> that's all i'm going to get from him today. you know what? you're going to be on again time and i i'm going to start on you again. >> i know. i expect it. >> i'm going to send you this leaked icc document, reynolds. these temperatures are not rising. what's your e-mail? no, don't tell me that.

>> we're all part of the family. you can track me down. >> sure enough. wolf reynolds or reynolds wolf? no, it's wolf blitzer, but he's not part of the family. >> here we go. microsoft reported quarterlily results after the bell yesterday. analysts came in a penny higher than what the streets were looking for. joining us now is john defuchi, analyst of jpmorgan. you say this is not good, not bad. what do you think? >> people expected to see a pretty bad quarter. everyone knows the pc market is in trouble, really challenging. usually how pc market goes, microsoft goes. so it wasn't as bad as people thought it would be. at the same time, pc market is really bad. and as the pc market goes, microsoft goes. if you take a look at numbers, maybe they have better than

people really thought they were going to be. but when you make appropriated adjustments, they were pretty much in line with the markets. it benefited this quarter, looks like it benefited from sort of channels inventory building up. >> so meaning that you think next quarter might not be as good because the stuff has been built up in this quarter? >> that's correct. usually when the channel builds up inventory, it usually works it down over time. everyone knows that windows 8 haas some challenges. if windows 8 picks up, the channel can keep inventory or be confident to keep it. if it doesn't, if demand for windows 8 picks up, if it doesn't, you're going to see the inventory probably down over the next couple of quarters. microsoft might put up numbers that were worse in the pc market and the pc market is not good. >> jan, i don't know if you were listenening earlier, but joe was talking about this and had some really good questions about why is microsoft perpetually stuck

no matter what they do. >> it's interesting, i launched as a senior appear list microsoft in late 2006. the stock was $27 and launched with a neutral. >> we've neverupgraded, we never downgraded. in fairness, the stock has gone as high as 36 and as low as the mid teens. but, you know, one of the problems with microsoft is it's been a victim of its own success. it has two to nominal businesses in windows and office. but unfortunately, those businesses are tie to the pc market. and that market -- and especially the pc market in the dwomt developed regions of the world. and that market is a maturing market. we've seen negative growth lately, even before the negative growth it was modest growth. one of the problems with all of this is there are a lot more pcs sold in the emerging markets. by piracy is rampant. >> good to talk to you.

>> coming up, we have more of today's top stories, plus a disrupter taking aim at social media. reputation.com shaking things up in davos. he has predictions for the future of technology. as we head to break, a look at yesterday's winners and loser. >> it was wonderful. >> bravo. >> it was great. >> it wasn't bad. >> there were parts of it that weren't good, with though. >> it could have been a lot better. >> it was terrible. >> it was bad. >> it was awful. >> boo. ♪

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cnbc. i am joe kernen along with becky quick. andrew ross sorkin is in davos again this morning at the world economic forum. he will be along in just a couple of minutes. morgan stanley, meanwhile, is cutting the ceo's pay after a year. gorman made $6 million in 2012, including salary deferred cash and stock options. he didn't receive a cash bonus and gorman made 11.5 million back in 2011. elsewhere, jpmorgan is seeking to block a shareholder proposal to break up the bank in the aftermath of the london loss last year. proposal from the afl-cio a's reserve fund called on jp morgan to form a committee to explore ways to enhance shareholder value including spinning off one or more businesses. the union says the bank has become too big to manage. jpmorgan is asking the s.e.c. to

omit the proposal trt bank's proxy filing. and the damaged lithium ion batteries from two separate 787 dreamliner incidents were not produced in tandem. an official says that the battery in nippon and the other one, a j.a.l. battery were made ten months apart. ana has canceled 78 more flights next week. >> that's bad news, too, because if you could link them some way, you could find a common problem and clear that up quickly. >> earlier this morning, did you read the boeing news on the wires this morning? they hope to glean some information from and i don't -- here the -- >> i heard some stuff from a battery expert yesterday who said he wouldn't fly on a -- >> a device seen as a key to explaining why a dreamliner jet made an mclanding in japan last

week is pursuant and up likely to provide safety inspectors with any of the data that they need said a person with knowledge of the situation. this is a reuters report that i just happened to see. i don't know what it means. circuit boards that control and monitor the performance of the plane's lithium ion battery were charred and may be of little use. >> when you talk to phil lebeau, find out what exactly this means. >> all right. >> let's take a quick look at the markets this morning. yesterday, the markets did close higher. the dow was up for ten out of 11 sessions at this point. s&p closed higher by 0.1% or even smaller than that. but it still counts as a win and as a result it's running through the longest running streak. it's been up six session necessary a row, seven session necessary a row and that's the longest running streak since back to october 2006. now, you did see the nasdaq under pressure yesterday because of what happened with apple

shares. in fact, the nasdaq had its worst day of this year so far base odd that. but this morning, the indices are all up higher, up about 0.3% across the board. if you take a look at what is happening in europe, you'll see green arrows there. part of this might be because of what andrew was telling us earlier. mario draghi talking about you could see some sort of a revival. right now in germany, the dax is up by 1%. in france, the cac is up by 0.6%. overnight in asia, take a look at these markets and you'll see mixed markets. the nikkei was up by 2.8%. things really cranking there. oil price these morning are up about 36 cents to 9631. the ten-year notoriety now is yielding 1.899% so that yield is picking up a little bit. dollar yesterday, we did see a mixed picture. this morning, you'll see that same story. the dollar is down against the euro, which is at 1.3446. and the dollar/yen, you see 90,

91. gold prices this morning are down about $4.90. the $1,665 an ounce. >> getting back to andrew in davos, he is joined by another special guest. and, andrew, you haven't really -- you know, we haven't seen any insight into your night life over there. and when, you know, you're young and all the disrupters know you, sean parker. are you going to fill us in? what did you do last night? >> sean will be on in the 8:00 hour, so we can talk about the night life. what did we do? last night i hosted a dinner with christine legarde. that was fun. and went to the cnbc party that you talked about. >> you weren't there. >> i wasn't listed, but apparently myself and maria bartiromo don't rate any more. >> not more than liesman. well, you're not part of the obama administration. >> well, you've had different

views on that before. >> all right. go ahead, andrew. >> in the meantime, we have a disrupter here, one of our favorite squawk disrupters to talk about what's going on here and specifically -- i should say who is here. by the way, are you warm or not? >> i am cold. it is very cold in davos. >> reputation.com, he is not wearing a coat. and you have some predictions about what's going on here about social media. there are so many disrupteres and pioneers and i get the sense that maybe you're not going to make some friends with all these views that you have on facebook and all of these businesses. >> i think facebook businesses are good businesses, but whether they're worth $60 billion? i don't know. >> why? >> the thing that's emerging in online gaming, there's such a thing as a passing parade. silicone valley investors understand that it's low friction to become a gaming player, but it's low friction off. so the stickiness is not there. and now i think it's ae merging

that the stick skiness of a social media mrad platform is not there. >> i think zinga is doomed. >> unless they become a gambling company, which they're trying to do. facebook, pintrest, you had a huge spike in interest, but then the power users tend to dominate. >> is that happening on facebook? >> i think it's happening on facebook, tumbler, all the common sites. unless you have a reason to be there -- facebook is technically the biggest photo solaris platform. there's no reason to stick around for a few years in a deeply embedded way. people tend to use it either for personal promotion or business reasons, but have basically stopped looking at it except for that kind of -- like i want to see what my ex-girlfriend looks like kind of way.

>> let's talk about the social commerce because you're not so up to that, either. we had the ceo of guilt proof open. >> i think brand loyalty is very weak on the internet. nobody cares deeply about guilt group or deeply about rent the runway. what they want is a product at a low price. that's what the promise of these companies is, to give us the product at a low price, the armanni thing, the shoes, whatever. since you're price motivated as a kuhn assumer, you don't care whether you get it from this channel or that channel. whoever has the lowest price is going win. i only end up with about 18 months of margin retention. after that, comes margin class unless you have an exclusive inventory, like only you get to sell armanni bed sheets.

and that's why any, i think, fundamentally market making company like a gilt, like a one king's lane or like a brvo, unless they can get exclusive inventory, meaning only you can get it there, i think they're going to have margin compression over time. the defensebility of the network effect, of the scale has been topped as a myth. >> so pierre told cnbc that he just made an investment. it allows you to basically rent my apartment and i can rent yours and that's what the business is. do you think this is not a smart business? >> peter is a very smart guy. what i think the challenge is for airbnb, unless you can only find your apartment through airbnb, he think you're in trouble. the renters use them both interchangeably. they don't care which one gets their rental to happen first. they go with that one and they . and as far as the renters fare,

they don't care about brand loyalty. >> you're in the reputation business. you're in the brand business. >> i'm in the data business, but that's okay? >> does that mean that brand doesn't matter online? >> no, i think it matters. but brand loyalty is, very hard to find. >> if you have a terrific product because the apartment that's actually for rent, that is the fundamental underpinning of the brand. here is what i'm up on in silicone valley so you can hear what i'm up on. i think the silicone valley is huge enriched. i think hard technology is the -- >> what is hard technology? >> stuff highways hard to replicate. the deep sign stuff, the engineering stuff. >> so what is the coolest thing in the hard technology? >> reputation.com is the coolest thing in the space in silicone valley. >> what else? >> i think there's some other great companies doing things around lenses and optics and other analytics. data being answereded.

>> price is it? >> amazon is the totally other beast. it's amazing. i think one of the things he's doing to maintain the competitive edge is he's putting an enormous warehouse with all the stuff that you want to buy next to your house and he can deliver it to you in 40 memberships. that will be the differentiator. >> thank you for being here. becky, joe, back to you guys. see you in a bit. if you have any questions or comments about anything you've seen here on squawk, e-mail us, squawk@cnbc.com. you can also tweet us. we have seen the social unrest as that country changes. now a socialist politician scared world markets when he nearly became prime minister last year is trying to change his image. we'll talk to a key member of his inner circle when we come back. and later, more newsmakers from the mountains, goldman sachs ceo lloyd blankfein sean

parker will be joining us live from davos. [ female announcer ] what if the next big thing, isn't a thing at all?

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earnings spread continues today. take a look right now. at this point, the doe is indicated to open higher by almost 50 points. this comes out of ten out of 11 sessions where the dow has gained. some real runs that we've been seeing. jim cramer called it yesterday. you see jobless claims looking at five-year lows whooil the markets are sitting at five-year highs. there is correlation in that 37 we have austin on to take a look

at how those things are matching up and where he sees the job picture from here. >> stock market is one of the leading economic indicators. you just go into that number and it's -- what it is indicating or could be indicating at this point is, you know, better economics. >> yes. >> coming up, measuring consumer companies, we'll get the first word from procter & gamble on its results. and the epic battle over greek austerity measures, now a key socialist candidate is going on tour to boost its mimg. we'll talk to the top finance minister about their program. >> great, everybody made it.

we all work remotely so this is a big deal, our first full team gathering! i wanted to call on a few people. ashley, ashley marshall... here. since we're often all on the move, ashley suggested we use fedex office to hold packages for us. great job. [ applause ] thank you. and on a protocol note, i'd like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh i'm sorry guys. ah sometimes the caps lock gets stuck on my keyboard. hey do you wanna get a drink later?

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. welcome back. the socialist politician who scared markets this is a greek talking about? oh, okay. i'm confused. i get it -- >> you thought we were talking about -- >> oh, okay. i thought i was leading to austan goolsbee. no, this is different. let me start over because i was totally messed up. this is not here. this is in greece. the socialist politician who scared world markets when he nearly -- see i saw the nearly. because he did -- he nearly became prime minister of greece last year is trying to change his image. he's on a world tour to meet with various global leaders. and he just arrived here in new york. his chief economic adviser is here with michelle caruso-cabrera our international correspondent. and last time you guys, i

remember, you weren't in studio. you're better looking in person. but you were -- >> on the balcony in greece. >> in greece! on a balcony looking over what was going on. >> the protests in the parliament. >> welcome. welcome here. >> dr. john melios. or john. >> john is okay. >> so, alexis who scared everybody is trying to change his image. met with stroible of germany. how's it going? >> it's going well. he is not someone to be scared about. he's a politician who says the obvious. that in europe, and especially in greece, we need change. we need to move away from austerity. austerity creates a lot of unemployment, is a negative spiral of recession, more austerity, more recession. and so nowadays in greece, we

have 26% of the workforce being unemployed. >> right. >> and this percent is more than 50% among the -- >> you know what, a lot of economists around the world would say, though, the solutions that you want would also lead to higher unemployment, because you don't want to necessarily lower wages, or lower the minimum wage. you want to keep union control in place, and so things that make greece -- greek very uncompetitive in the world market. they're more expensive relative to other potential employers around the world. >> have a different analogy. greece is a custom intensive country, it's not a labor intensive country. besides it's a very small country. so we cannot correct things by cutting wages. we have to reform the state, and we have to boost technology, better organization of the economy and so on. >> what kind of austerity are we

talking about? michelle when we talk about austerity in europe, has there been any austerity that's involved cutting back on services? or when we say austerity do we mean just raising taxes? isn't most of the austerity in europe raising taxes? >> no. >> not in greece? >> it would actually be starting to collect taxes. >> we raise taxes, which have to do with the middle class -- >> that's the austerity you're talking about, raising taxes? >> yes. >> and also the cutting of wages. we have a dramatic cut in wages, not only in the public sector, but also in the private sector. because the economy, the basis itself on small and medium enterprises, which mainly produce for the domestic market, this has been a distraction. we have lost a lot of jobs, a lot of company, the private sector in a very bad state, in a country which was growing with a

rate of more than 4%. but this double -- >> so much more than you were taking in at that point. there's a deficit that has to be paid off. and the measures you're talking about, technology and organizing the economy could take a long time to kick in. >> this is correct. but the main problem in greece was always state revenues. because they do not tax the rates. they allow tax evasion for the wealthy people but also the middle classes, up to a point. and this is a very big problem. if you look at the economic data you will see that the state revenue in greece is at least four digit points of the gdp lower than the european -- >> it needs to be better tax collection? >> yes. >> but i remember reading about the tax on swimming pools in greece. people refused to pay things like that, they think it's ridiculous. >> exactly. this is the problem. and we have a lot of corruption.

and the last months, certain things became known that even living politicians were keeping data of people not paying taxes -- >> as far as -- >> they've got at least another list -- >> peel who had super bank accounts. what do you think of president obama? >> i like president obama. >> why? >> i think he follows a very different course and we had discussions here with the administrations and think tanks and so on, and there is a certain level of understanding that these discussions were very constructive, and frank, and we agreed upon several things. one thing is that the european recession is a threat for the global economy. and we have to move in another way. we have to follow what president

obama is doing in the united states. >> are you a socialist? >> yes. >> okay. you like what the president's doing? >> you know, when sarah palin called him a socialist, even he considered it an insult. >> okay. because in europe, the meaning of the word is a little bit different. >> but your point is, we are on the right track here. >> yes. >> we're on the right track. >> yes. i would say liberals, you say socialist. >> i agree with you. >> thank you. >> thank you. >> when we come back we have more from andrew in davos including an interview with goldman sachs chief lloyd blankfein. first consumer products on 3r5id. the cfo of procter & gamble. the ceo of kimberly-clark will be talking to us first on cnbc about their latest results. this is america.

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gaining momentum. stocks eyeing another bull run and we are seeing what's working for your bottom line. stay ahead with the smartest minds in business. >> feeling the flow. working it. working it. >> and get the tools before the day's first trade. what you need to know that could boost your portfolio. plus procter & gamble and kimberly clark rarting this hour as the second hour of "squawk box" begins right now. pretty good, huh? procter & gamble out $1.22 is the core. the number that was first given was $1.39 but we're going to look at core to compare to the estimate of $1.11. so $1.22 versus $1.11. that is a 12% core earnings per

share growth rate. they might yes, for the core, and the revenue number, is sales rose 2% to 22.2 billion which is also before the estimate of 20.659. actually, i got 21.91 also. so a little bit above on that. the third -- third quarter eps is seen at 91 to 97. and the estimate on first call 95. so that's in line with expectations as well. you raised it all in earnings per share guidance to a range of 404 to 414. that's all and i don't know how that compares. that's all in so i don't know how that compares to what first call has. nearly number from first call is 397. don't forget, this is -- this is a fiscal second quarter.

so, not like the rest of the companies that we've been talking about, which are in the first quarter. increased its outlet for share repurchase to $5 billion to $6 billion. and that is up from $4 billion to $6 billion so they raised the low end of the amount of share buybacks that they're planning on doing. estimating net, and organic sales growth, in the range of 3% to 4% for the january to march quarter. talk with cfo of procter & gamble joins us now for more on the quarter. where were you before john, 3% to 4% where you were? >> well on the year we were at 2% to 4% top line. we've raised that to 3 to 4. on a year, we were at $3.80 to $4. we've raised that now to a range of $3.97 to $4.07.

so really the strong result in the second quarter has allowed us to improve our outlook on the year for the top line, the bottom line, and as you said, share repurchase, while, and this was important, at the same time strengthening our plans in the back half of the year. >> the barbarians were at the gate. when was that, john? i was pulling for you, being a cincinnati boy. but, and you know, they were at, you know, talking about your new guy that had a tough job anyway trying to replace a.g.laffley. suddenly you're going to be in a new high today. $71.35 bid and $17.63 ask. i'm trying to figure out where the inflection point was, and when things turned around. about six months ago, wasn't it? >> well, last -- last february we announced a five-year, $10 billion productivity or cost savings program and followed that up in may with a better articulation and greater focus on where our growth strategies

were. >> is that your idea? >> big business and a team sport. >> you and the ceo. all right. so you're talking about, and are you seeing -- this is tangible evidence that that initiative was successful? >> it's early days. but certainly is encouraging. we were ahead of plan on the first quarter. we're ahead of plan on the second quarter. we're seeing progressive share improvements, market share improvements. we're encouraged with what we see. >> where are you -- what was the the rap that procter & gamble was getting when you had to try to turn this around. i think it was you were having trouble defending your prices against a private label competition, and people need to want to own -- they need to want to buy procter & gamble products but to get them they might have to pay a little bit more, right? you can't meet at the bottom with your private label competition. >> well, there was some concern about prices some were offering

which we increased to offset about $3.6 billion of commodity cost increases over the last two years. but the bigger thing, i think, and we think about our products and the consumer reaction to them is the holistic valuation. but as product efficacy, the consumer experience, the consumer sentiment, as they use our products. and we're focused on really three or four big things to ensure that we have competitive value propositions. one is to all have a product in our categories that is available at a lower price for those consumers for whom price is a bigger part of their personal value equation. that's items like love's diapers, bounty and charmin basic, gain detergent. the second thing is making sure we clearly communicate the performance and superiority of our products. tide pods, two times the cleaning power of the next six competitive unit dose offerings combined. bounty towels, two times more

absorbent than the leading national brand. the third piece of the value evasion is the division, which is apparently value. when we innovate successfully we have crest 3-d white which has grown market share in the u.s., despite its premium price, every month since it was introduced. >> that really works? what's it got in it? does that make your teeth white? >> it makes them very healthy and very white. >> white. whiter than normal? i need to look into that. >> if you're not -- if you're not whitening you're yellowing. >> as you get older, i just -- i wear, you know, i just try to wear a brown tie occasionally to match my yellow teeth. i've given up on trying to get them. that's what happens. you'll see. >> coffee every day. no, i'm with you. >> we have a whole portfolio of products, joe, that you might be interested. >> those strips i put them in, i've got to sit there for 20 minutes. and then i tried the dentist and i thought he was killing me. i don't know what he was doing to me with the breeching stuff.

>> mouthwash. >> all right. >> so you don't consider your tide pods, that's -- you mention innovation after that. that seems like innovation to me. and i wonder how p&g can continue to innovate. you can take products you've already got and innovate with as evidenced by those tide pods. >> there are tons of degrees of innovation. tide pods is a great example. that item is going to be about half a billion dollars in sales in its first year. it's one brand, in one country, that has a huge future ahead of it. because of the performance. it now has 75% of the unit dose segment from a market share standpoint despite its premium price. it's a great example of how innovation creates value for consumers and improves -- >> but how did you win back some of the market share that you'd lost before? did you lower price points on some of these things? is it just a gradual coming around? what did you do specifically to win back some of that market share?

>> there were some items, becky, where we did lower prices. you know, our categories, at the category level are generally priced inelastic. so if we increase prices other competitors do, there's generally not a big impact on consumption. in those cases where we increase and competitors choose not to we do need to adjust back. we've done that in several categories. but we've also been much more deliberate in the communication of value, and in our innovation stream has strengthened significantly, as well. >> we're using core, are we giving you more than we should? is it really just a two-cent beat or an 11-cent beat compared to what analysts are looking for? >> i think it's 11 cents. >> so $1.22. >> yeah, yeah, okay, good. >> because i trust you when y you -- when you do the core. so, we saw a couple of unemployment claims numbers,

jon, that were really much, they're five-year lows. do you feel some wind at your back in this -- in the united states in terms of the consumer being a little more flush? >> the consumer's definitely hanging in there. we haven't seen an inflection point in market growth rates yet. but we also haven't seen any deterioration. so it's reasonably good. there are other tailwinds related to the broader manage crow environment, much more -- >> like what? >> the commodity environment we saw the last few years. certainly a better environment from a foreign exchange standpoint. multinational company earning profits. >> forex. and europe is better? >> europe, northern europe is pretty good. southern europe is still a challenge, because your previous guest would indicate. >> all right. you don't sell a lot of soap in certain countries over there. no, i'm kidding! i don't mean to -- i don't mean,

you know, deodorant in one country in particular. let me think, anything else, jon, china? how's asia? >> asia is good. china is good. we grew high single digits in china. we expect that to accelerate as the year progresses. so generally our developing market business is very healthy. we grew 7% overall. 11% in the brick markets. over 20% in brazil and india. so that continues to be where a disproportionate amount of growth is coming. at the same time we're strengthening our develop market business which is starting to accelerate a little bit. >> thanks, john. hope to see you again next quarter so we can get the lowdown on your results, and i don't know, something happened about six months ago stock was much lower and some of the numbers didn't look that good. you kept a stiff upper lip. but it paid off so far. appreciate it. thanks. >> thank you. the world economic forum, the ran annual meeting in davos continues and today we have a

great lineup from there. let's get to andrew. >> becky, we do have a great lineup starting at 8:00 we have lloyd blankfein, ceo of goldman sachs in exclusive interview with us. then after that, sean parker, of course, of facebook, spotify and just about everything else. but in the meantime there has been some news made this morning and it is moving the markets. mario draghi making upbeat assessments of the economy and a recovery in six months. >> the level of economic activity is in the process of stabilizing at very low levels. and we foresee a recovery for in the second part of the year. we can have a positive development if national governments would persevere in their actions. both in fiscal consolidation,

but especially now on the front of structural reforms. >> christine lagarde, however, making some comments about a potential reverse, and worries that we could actually fall backwards. take a listen to this. >> we have the central banks on the one hand, which have done quite a lot, which have been the fireman in the way and you have the policymakers on the other hand, particularly in the eurozone who have made some significant progress and need to keep the momentum. >> finally, marissa mayer from yahoo! making some public comments for the first time. take a listen to this. >> yahoo! has always been a very friendly company, has always been, because of our focus, in addition to technology, but also on media. it ultimately means that there's really an opportunity for strong partnerships. and that's what we'll be focused on. so we work with, for example, apple and google in terms of the operating system in terms of social networks, we have a strong partnership with

facebook. and so we're able to work with some of these players who have a lot of strength in order to really bolster our user experiences that we offer on yahoo! sites. >> on a lighter side, i should say, becky, ladbrokes, the betting site, is taking bets on whether a snowball hits angela merkel while she's here in davos. that's an 8-1 bet right now. also if you could see a joint sledding session between david cameron and george osborn, that's 100-1. and finally, 33-1, not a bad chance, that the prime minister cameron is spotted with bono. that may not happen, since bono has not arrived yet. we'll see about that. in the meantime, back to you. we'll come back to you at 8:00 with lloyd blankfein. >> you got hit by some snow last year, too. remember at the end? >> by the way the chances of that are probably better. i don't know, maybe ladbrokes could take bets on that one. i'm looking at the production guys, and i'm sure there's going to be something coming. >> like the gatorade, the

victory at the end. >> if you consider that victory. >> we'll see you in just a little bit. by the way, folks at home, if you have comments or questions about anything we're talking about e-mail us at squawk@cnbc.com. or follow us on twitter. can the bulls remain in control and is january an indicator for the rest of the year? the bulls sure hope so. we're going to talk about that right after this. ♪

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welcome back, everybody. kimberly-clark is just out with earnings. procter & gamble came in with a beat. kimberly-clark is, as well. company looks like it earned $1.37 versus the 1st.35 the street had been expecting. revenue also better than expected. $5.3 billion. talk about organic sales being up by 5%, although that does exclude the impact of foreign currency rates and some lost sales because of the result of a restructuring action. at this point, that stock looks like it is trading slightly -- actually, is that a real -- i

have a bid/ask that's mixed right now. shows those two numbers. kimberly-clark coming in with numbers for the quarter better than expected. i haven't seen any guidance have you? >> no, not yet. i'll keep an eye on it. >> we'll continue to talk about some of these issues. those numbers from procter & gamble, that stock is indicated higher. that's a dow component and that is definitely going to help things out today when you look at the overall picture. the s&p 500 closed higher for the seventh consecutive session but barely, barely barely closing higher. we'll take it anyway. that index crossing above the 1500 level for the first time since september of 2007. earlier in the session before pulling back a little bit. the dow is up about 5.5% in the month. that's the best january since 1997. the question is where does the market go from here. austan goolsbee is former chairman of the council of economic advisers, and economics professor at the university of chicago school of business. he joins us as our guest co-host this morning. also richard bernstein is a cnbc

contributor and both are here to talk about the health of this rally, and the economy. richard, you've been a bull for a long time. and you're sticking -- standing by it at this point. you think it's really kicking off at this point? >> i think, right. becky, we have to say is the economy booming and we'll all say no. is the economy continuing to improve? the answer is clearly yes. you look at something like jobless claims which is the key leading indicator. it's roughly a five-year low. you look at the trend, the trend continues to improve. that's what the market is responding to. it's our view that earnings are close -- the profit cycle is going to start picking up here as we go through the year. it's hard to believe with improving economy, that the stock market doesn't do well. >> austen, you've been talking us through this and you've been pretty right on with jobs numbers, you've had some really good insights. >> i think the economy is getting better. first i just wanted to object. joe comes on, he's reading the -- he's reading the script about a scary socialist, and he thought it was me.

what is that about? >> i looked at -- >> the day i left the government, we were downgraded. we were ground graded when i left the government. now what does that tell you? >> i do have a lot to talk to you about today. i don't think of you as a socialist. in fact i've seen you try to speak the truth and get smacked down >> no, no, i'm talking about the kant thing. now that you're back at the university of chicago, you're also working for robert wolf, i guess. all right. but you do there are grains of honesty in a lot of -- >> oh, come on. >> he is not going to say -- he's not going to say -- >> whole grain -- >> you're not going to toe the party line. i know that. so one of the first things i wanted to ask you is you saw the inaugural speech. and i know speeches are speeches. you're at the university of

chicago as an economist, do you think that was a speech that will take us down the path to the growth that we want for the economy? or, were there things in that that either weren't addressed or that we're glossing over in some of our real problems? >> it seemed to me, and i was at the inauguration, i took my kids over there. they were less enthusiastic about standing out in the cold. >> they were yawning like the president's kids. >> i thought much of the speech wasn't really about the economy. so it's a little bit of a -- i think the frame is not exactly fair. i think the parts about the economy that were about the economy, i should say, i thought were, you know, we got to invest in our people. we got to invest in our economic infrastructure, and we got to invest in technology to be the engine of growth. i think that that part

absolutely, i mean in my view there's one of two models that countries take. one is we're going to be the cheapest, lowest wage, try to drag low-skill manufacturing and that's how we're going to grow. the other is the u.s. model, which is we're going to veps in our people, we're going to try to keep moving up the quality ladder. i think that's what we have to do. >> what about the programs, though, can we continue to go full speed ahead without taking a look at how we spend that money? >> probably not. but in the form we know from the aging of the population, which in the u.s. is less pronounced than anywhere else in the advanced world? but is still, because of the baby boom, a big issue. that if we do nothing, just the promises we've made plus the aging of our population is going to imply the size of government gets bigger than it's ever been. and that revenues are not going to cover it. so either we're going to have to cut entitlements or reform ebb entitlements or raise more revenue to pay for it or some

combination of both. i thought in -- >> i thought in the speech, and certainly in the budgets, and the stuff that the president's spoken about, he's always said we got to do this in some balanced way. and the contrast has never been we got to do it 100% in taxes. it's been the president saying, do it balanced, and the republicans saying, let's do it all from cuts. >> this is the contention you keep making and it's all in your notes, you said even during the fiscal cliff you said the president came ready to deal with -- and the republicans didn't. look at the deal that was done, austan, does that look to you that you saw the money that's being raised versus the spending that was being cut, does that look to you like a balanced deal for the republicans? did the republicans get a balanced deal -- >> they got a little bit. they got -- >> come on. >> he could have gotten 100% of what he wants. >> and then the republicans -- >> -- deal was balanced the previous summer? >> i did. >> you felt it was balanced? it was 100% cuts. >> it was three to one just like

simpson-bowles. >> combined these things are like three to one. >> it just depends on where you are in terms of, you know, relative in the universe and then you said. then you said that the republicans for once weren't totally ridiculous with the debt ceiling but they extend the debt ceiling -- >> richard, stay with us. austan you're here for the rest of the show. we'll have more. at 1:45, the aflac duck was brought in with multiple lacerations to the wing and a fractured beak. surgery was successful, but he will be in a cast until it is fully healed, possibly several months. so, if the duck isn't able to work, how will he pay for his living expenses? aflac. like his rent and car payments? aflac. what about gas and groceries? aflac. cell phone? aflac,

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welcome back to "squawk box," everybody. got a lot of things going on on set today. procter & gamble reporting earlier in the hour. the dow component coming out with earnings of $1.22 a share on revenue of just over $22 billion. the company also increasing its guidance for 2013 and that stock is trading higher in the premarket. morgan stanley is cutting ceo james gorman's pay after a difficult year that saw the bank's profits decline. reports say gorman made $6 million in 2012 including salary, and stock options. gorman made $11.5 million in 2011. and the damaged lithium-ion batteries from two separate 787 dreamliner incidents were not produced in ando. a japanese battery probe says a jal battery that caught in fire were made ten months apart. ana has canceled 78 more flights this week. >> mario draghi making comments

this morning in davos, saying economic activity is stabilizing. let's find out what that means after the currency in the oil markets. on oil, carl larry of atlas commodities and on currencies, mark chandler of brown brothers, and richard bernstein has grashlly decided to stay with us for the remainder of the show along with austan goolsbee. mark, i'll start with you. if you don't look in equities, a lot of it has been the yen and actually the euro to some extent and the relationship with the dollar. is it related to what we're seeing in the equity markets and what we're seeing in the currency markets? >> seems to be that the correlation between the euro state and the yen and the u.s. stock market is going to become decoupled. i think there are three drivers today in the foreign exchange market. one is the new weakness in the yen, probably because of japanese economic data. deflation, the dominant scene there and a weak trade deficit number earlier this week as well as the job. we got the ecb reporting that more central -- more european

banks repay their loans, their long-term operations this morning, and also tightening up conditions leading to higher interest rates in the eurozone, helping the euro. and a third thing is weak sterling on the back of a disappointing gdp figure. >> all right. so how does it play out in 2013, mark? what could happen in the currency markets that would be the dog wagging the tail? i mean are there things that important in currency that can dictate what happens in other markets for the rest of the year? >> i don't know. i think right now the markets are on their own rhythms. there's been an atmosphere partly created by the european central bank, partly by economic data. yesterday the weekly jobless claims in the u.s. declined more than people expected. and i think that there general people are taking risk off. i think that's the underlying theme at least in the first part of this year. >> okay. >> i'm going to go to you now. is it carl or larry?

it's bad to have two first names, makes it very -- and then you got, you know, and our teleprompter says thanks, carl, larry and mark. i'm looking for larry. you need to play larry because of the -- >> curly? >> yeah, curly. you're curly. you're larry. all right. carl, where oil is right now in the 90s, is that going to be the low or the high for 2013? >> i think it's going to be the low. i mean what we're looking at right now is just an economic recovery. whether you call it slow or fast or just kind of moving steadily. we're here and that's where we're going to stay. it's hard to see oil going any lower here because we have to see another recession to see anything like that. over the past ten years we've seen oil going up, up and upnd took that recession in 2009 to go down. we're looking at a baseline of $90 and definitely going to see above $100 sometime soon. >> yeah, go ahead. >> guys, is that a question for both of you? in japan, and also we're talking about this before, in japan, they clearly want to replay,

they'd like to have a weaker yen but they've also shut down all their nuclear plants. so they have to import a lot of energy. and if they weaken the currency and energy prices go up, they're really going to kill their economy more. what do you see happening on that issue? i think that's the big issue for japan and the conundrum for them, if you will. >> maybe i can take a quick stab at this. i think if you have a country that has deflation, and inflation seems to me that by definition it means higher prices. and a weak yen means there's going to be higher import choices. but leading to higher domestic choices, as well. i think that's the hope. i don't know if they can deliver on that. the bank of japan and the japanese government are skeptical about how high inflation is going to go this year. i think of all japan's problems that they face right now, high inflation is not one of them. >> okay. i think, you know -- go ahead, carl. >> i think you look back here the past four years in the u.s., we've had a weak dollar and oil prices have gone from almost $40 back in 2009 to nearly $100 this

year. so it's all about demand. and that's what we're seeing here. there's plenty of supply out there, but really at the end of the day capacity is limited. we have 3 million, 4 million barrels above what we have right now. although the u.s. is well supplied. as we see growth here in these economies, you know, we're hitting a ceiling soon. >> okay. okay, say good-bye to -- it could be carl bernstein. and then we'd be talking about, right? i mean, that would confuse you. >> no relation. >> right. >> well, all right. anyway. carl and mark are leaving. carl larry, and mark but austan and -- all right, i got it. it isn't that easy, really. >> really it is. >> it is pretty easy? >> yeah. >> i make it harder. >> while you were having this conversation, i'm following some tweets, and in davos right now, he's watching a debate that's taking place between eric cantor

and joe stiglis. and i think they're having the same discussion that we've been having. >> wait a minute. >> eric cantor. are debating about whether they can continue to spend, how you set things up, what austerity measures are -- >> i'm worried. >> this is a conversation we've been having here. >> but we might not get to the end of the show. >> when they come together doesn't the universe end or something? >> explosion -- >> only if they -- >> yeah, but i mean love/hate is a fine line. those guys like to get a room or something. who knows. coming up, it's flu season and you probably -- you probably used a kleenex or tissue. i don't know. you probably used a kleenex or two. kimberly-clark wants to thank you for that. one of the largest household products makers will join us after the break. then at the top of the hour, austan's favorite bankster, lloyd blankfein. goldman sachs chairman and ceo. the senators all call him --

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welcome back, everybody. kimberly-clark posting quarterly numbers just a few moments ago. the company came in with earnings of $1.37, two cents better than expected. joining us is kimberly-clark's chairman and faux tom falk. >> good morning, becky. >> why don't you tell us a little bit about the moving parts. looks like the personal care segment did very well. >> we had a solid quarter. obviously our international emerging market business did great. we had double digit top line there. markets like china are -- our china diaper business was up 50% in the quarter. so part of that is we're going to more cities. part of it is we're still seeing the consumer move into our categories from china. russia was up 15, brazil was up 10. so pretty broad-based, good, emerging markets. >> just made me think, do you know the percentage of babies in

china that wear diapers versus -- or wear disposable diapers? >> when i was there i didn't see a lot of diapers, back in 2008. is this just a brand-new -- >> that would be a huge possibility for market expansion, right? >> as their incomes improve, joe, they're moving into the category. so in the bigger cities, you know, where a lot of our business is today, quite frankly, you're seeing the consumers in the category and chinese moms are just like moms everywhere. they want the very best products for their baby. >> and selling diapers in china seems like -- might as well move the headquarters over there. >> we were talking about an aging population -- >> i know. >> you're looking right at me saying that. >> joe, every time i'm on we talk about depends. >> all depends on who's on. i'm talking about the growth, you've got billions and billions -- of course, they've got to have more babies over there, too. the one baby rule doesn't help when you've got 2 billion people. >> you're starting from scratch. >> ground zero. >> and they started to relax that a little bit, joe. if you're both children of

only-child households you can have a second baby in china now and that's starting to change a little bit. >> you spend any lobbying money on that over there, tom? >> no. we're just letting nature take its course, joe. >> lobbying money. >> hey, tom. if you looked at some of the developed markets, what about the united states? how are things faring in the economies just from the perspective the what you're able to sell? >> in the u.s., it feels a little bit like the consumer's gone sideways. so ceo mom is still shopping from a list, she's still careful. she will pay more for real innovation if it's a really better product, and it's better for her family. so we're seeing that and our shares were pretty stable. we were flat or off in six of eight categories. not any big shifts in private label during the year. and so, i'd say, kind of going sideways and on the b-to-b front, you're seeing a bit of an uptick in office occupancy, manufacturing is kind of going

sideways. some bright spots. some things are slowing down a little bit. the u.s. and europe were a little slower, and a lot faster growth for us in emerging markets. >> we spoke earlier today, probably just about half an hour ago, with the cfo of procter & gamble and he talked about how there are some real tailwinds. a lot of them being commodity prices. not necessarily going to be rising at the same rates we've seen in the last several years. >> for us, commodity costs in 2012 were a tail wind. but we had currency that was a headwind. and they've basically just about offset each other. and 2013 we see that flipping around a little bit. we expect to see some commodity headwinds, mostly pulp and fiber related costs, and a little bit of distribution cost in some of the emerging markets. but we may see some currency benefits, as some things have picked up a little bit. the a dollar in particular and a few others that affect us in the emerging markets. >> if you have other concerns, aside from just what may be happening with commodities what would they be for this year? >> i think we've talked a lot

about some of the other issues you were talking about on the show. the whole fiscal cliff, the sequester starting, the, you know, all the uncertainty around government policy, in the u.s., is certainly affects consumer consciousness. we'd obviously love for the congress to get around the corporate tax reform. everyone agrees that's necessary. i think there's broad agreement on the principles of corporate tax reform. unfortunately, we can't get past the urgent to get to the necessary. >> tom, austan and i were talking earlier about some of the pricing power opportunities in the emerging markets, or inflation, if you prefer that word. could you give us some insight in terms of how much of foreign growth is pricing power, how much is actually unit? >> if you look at our mix around the world, there's more volume growth. a little bit of pricing. more the pricing is related to currency. so wherever you've had a major currency move, usually there's a pricing offset that goes with it. so, for example, in brazil, the currency was down 15% last year.

you're starting to see some pricing, they've got a lot of imported materials that go into those products. beyond that, we specifically are seeing a little bit of mixed shift, and so we're selling more premium diapers in china, as we launched into the upper tiers of that market and consumers, as their incomes improve, want to move up and buy a little bit better product. >> tom, austan goolsbee, there's been a lot of discussion in china about maybe the y have been experiencing somewhat of a slowdown or weren't growing as fast as they were before and kind of counterargument, no, they're coming back. have you seen any of that in your business or has it pretty much been straight growth? >> it's -- there are some sectors in china that slowed down a little bit. if you look at gdp per capita it's still going up, and so that means more consumers have money to spend in categories like ours. and so, part of our growth has been that phenomena. we're also expanding our distribution footprint. we were in 70 cities at the beginning of last year. we were at 80 by the end of the

year. we'll be at 90 by the end of this year. we're continuing to build out our distribution presence across china. >> wow. well, tom we want to thank you very much for joining us. and congratulations on the quarter. >> thanks, becky. >> thanks. >> when we come back, we have some stocks to watch this morning, as we head towards the opening bell on wall street. coming up, a special interview with goldman sachs chairman and ceo, lloyd blankfein. live from the world economic forum in davos. the future of wall street, the economy, and washington. that interview and much more when "squawk box" continues.

let's take a look at some stocks to watch. procter & gamble indicated up about a dollar. the company reported earnings that were above expectations by about 11 cents or so. it's a new high, a 52-week high. and the sticking along the diaper scene, procter & gamble, and then kimberly-clark reported moments ago. first quarter net was above expectations. $1.37, which is what the company reported. which was also above slightly, right? >> revenue was a little better than expected.

>> microsoft reported results late yesterday, and windows 8 helped a little bit, but i guess they'd call it a solid quarter, but nothing to write home about. tempur-pedic is trading sharply higher. fourth quarter earnings were 60 cents, estimates 55, and then net sales fell 7% to 341.1 million dollars. that was finally boeing u.s. safety regulators are nowhere near finishing an investigation according to sources. and they also, i guess, are talking about circuit board, cheap little circuit board which now could be part of the issue, i guess, and commentary that could you imagine if you know these crappy little circuit boards that don't cost very much money at all could be grounding the 787.

we're going to hang with these guys now, right? i want to talk to austan. this is a continuation of our last conversation and i'd like you here. both of us agreed on camera, we agree on a lot of things, but we agree hat what we want is the private -- >> private sector should be driving growth. >> and then if it were 4% growth, tax receipts go up, more people have jobs. >> yep. >> the government can afford to do more things. so we're both in total agreement. >> yeah. >> that the private sector is what we want -- >> yeah. that is above -- sustainable growth. >> that's all we really should be thinking about. >> absolutely. >> then my question to you is, is this -- is the president, does he appreciate what our agreement here -- the same -- >> i think he does. >> judge is it then, that so many people think that the private sector gets short shrift from president obama and his administration? >> i don't know. you've got to tell me that.

that's not -- they're your people who are upset. and you're upset. i think if you look back at, say, the small business survey of people expressing government regulations it's a big problem. if it's up, it's not at record highs. the record highs were actually under the clinton administration. and i think they tend to be correlated, early in the clinton administration, it was the highest that they've ever -- as the economy improves, i do think there is a tendency of aye lot of practical people to kind of correlate how they think policy is doing with how the economy is doing. >> so as the economy is improving, i think you're -- >> quite likely to see a lot of business people say, well, i like the tone the administration has taken. this is what happened under clinton. as the economy got better and better they started saying well clinton's not a bad guy. his policies are okay. >> that was >> you would say it's a false

narrative that president obama is less private sector oriented that bill clinton? >> i think a lot of that is false narrative. i think the president, if you go through a list of things that, in 2008, business people would have said they wanted done, like pass some big free trade agreements. reform the past, try to streamline visas -- >> columbia and -- >> but they weren't going to pass. it was obama who breaks the logjam on those trade agreement and passes korea, colombia, panama. i think we can go through a list of a bunch of significant pro-growth, pro-business, pro-market things that the administration did that i think will contribute, and i would put patent reform in there and i would put reforming the visa system to reduce where people come in to visit the u.s., that's a big deal. and if we got some more high skill immigration i think that would help. >> so the next four years, the

obama administration will not be a hynde rans to private sector growth getting back to 3% or 4%? >> i don't think -- i think -- >> you think -- >> i think it's a help. >> trying to get in to growth rate. >> -- from the financial crisis? >> i think a lot of this. the fact that normally housing is about a third of an expansion, it's a very cyclical sector. we got way overbuilt. we had 6 million vacant homes. so of course nobody's building new houses if there's 6 million empty ones. if that overhang is cut -- >> let's say the president came to you and said i think 25% of government spending on gdp is an okay number because i've increased entitlements for obama care, i've done other things where i've increased entitlements. i want to bring tax revenues up to 25%. i don't want to meet at 18 or 20 like we've had for so long, would that be okay with you if it was 25%?

would that be anti-growth for the private sector? >> my view is you should decide -- what is it you think the government should do. you don't pick a number. you pick a -- >> so -- >> the aging of the population in the u.s. implies that the correct number of white -- >> -- hire -- >> -- is going to change over time because if you say i think the government should be helping people with their retirement through a social insurance like social security then it means the government size number is going to change over time, not just a fixed number. >> but if you look back at the last 60 years the average has been around 22%. >> so yes, if you try to fix it at 22% you're implicitly saying i'm going to pretend like the aging of the population is not happening. so i'm going to fix it, the spending levels at what they were, say in 1980, then you're saying, the fact that there are a lot bigger share of older people in the u.s., i'm not going to let influence the calculation, and so you're implicitly saying let's try to

waive the aging of the population. >> or you fix it? the reason people are getting so old is because they're living five years, ten years longer. >> i hope you agree -- >> we've got to go, though. >> we'll continue this conversation. austan -- >> andrew, why don't you tell us who you have coming up? >> we got the one and only, it's an exclusive interview with lloyd blankfein, the ceo of goldman sachs. you can only seen it right here on "squawk box" when we return. ♪

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our "squawk" newsmaker of the morning live from the world economic forum in davos, goldman sachs chairman and ceo lloyd blankfein. >> the third hour of "squawk box" begins right now. >> but the knot in the private sector -- >> we're back. >> welcome back to "squawk box" here on cnbc. first in business worldwide. you guys are like an old married couple here. did you get -- did you settle it all? >> because we traded off >> thank god i passed you the

baton. i give up. >> becky quick is here along with austan goolsbee, andrew ross sorkin and richard bernstein is here. andrew sorkin is going to join us from the world economic forum in davos, yes with goldman sachs ceo lloyd blankfein in a second. and i already mentioned austan our guest this morning austan goolsbee, former economic adviser under president obama. and richard bernstein, who has got an ee upon muss company now. you used to be at merrill for how many years? >> over 20. >> now you're at richard bernstein -- >> advisers. >> and you don't use -- >> you don't use your middle initial? >> i don't use my middle initial. >> which is fine. there are a lot of richard bernstein's. >> there are, john smith in new york city. >> it's just about it. >> it is. but actually you're probably the most noteworthy one. >> richard bernstein dotcom is an opera singer. >> really?

>> there's an opera singer named richard bern steep. >> all right let's talk a lit about more about what's been happening with earnings. we've gotten good news this morning from dow component procter & gamble. it came out with numbers at $1.22 a share. that was 11 cents above what the street was expecting. revenue was also a little higher than the street had expected. earlier we spoke to the procter & gamble cfo jon mule perp >> the strong result in the second quarter has howed us to improve our yacht lick on the year. the top line, bottom line, and as you said, share repurchase while, and this is important, at the same time strengthening our plans in the back half of the year. >> this is some big news from procter & gamble. there had been activist shareholders who had been trying to push them to do some things. these numbers had been much better than expected. the stock is going to be high today. that is helping out the overall markets this morning. dow futures up by 52 points above fair value. this comes after the dow closed up ten of the last eleven sessions. s&p futures are also indicated

higher up by about 6.25 points and this is after the s&p futures were higher for seven sessions in a row. that's the first time that they've seen that long of a winning streak for the s&p since all the way back to october of 2006. overseas in asia you saw some strong results at least in japan. in japan, the nikkei was up by 2.88%. shanghai and the hang seng composites were slightly lower. in europe this morning you're going to see more green arrows though. right now it looks like germany is the biggest winner of the three major markets. the dax is up 1.25%. >> right now andrew in davos with the "squawk" newsmaker of the morning. hopefully lloyd has got an ifb in, too, we can all ask some questions today, can we do that, andrew? >> absolutely. absolutely. we do have an exclusive interview with the man. i want to show you him because he looks slightly different than he has historically. he is lloyd blankfein, the ceo of goldman sachs. take a look at this, everybody. a beard. i want to know, actually, before we even begin this, is there like a -- is this a beard -- you

shaved, remember you had a beard for many years before you were the president of goldman sachs. >> yes, i did. >> then you shaved it. >> yes. >> and you were shaved all through -- financial crisis and everything else. does this now mean that you're relaxed? >> we're going to have all the strategists at the firm grab it. >> i always had a beard on vacation. i thought gosh, we were on vacation i should keep the beard. >> this is not a play for ben bernanke's job in 2014 or anything else? >> no, it's not. >> give us your sense. you've been here now for the past three days talking to everybody around, the sense here that i have is a remarkable sort of upbeatness that has not been here for a very long time. >> no. >> you've been upbeat before. jamie diamond's been out saying that we could have a huge sort of growth spurt. draghi this morning saying at least in europe there's a possibility of a recovery in the second half of the year. where are you on all this? >> it's a shame in a way because everybody, it's always wrong

here. remember last year at this time it was going to be the complete derailment, everybody was his tearial and fearful and look how it turned out. i think people very -- people have reason to be optimistic. in a lot of ways the worst case scenario was taken off the table. don't forget, we're in europe. so it's a very european tone to here. and there's a lot of relief that the euro isn't going to collapse. so with that downside worst case off the table, you look at more mundane problems in europe like the lack of growth. it's real. but i will tell you it's a lot different. with the passage of time even those problems get chewed through, the deleveraging process gets going. i do think there's room for optimism in up, but not as much as in the u.s. the place that is in a much better position right now is the united states. again, you know, we obsess about our problems, what's going on in congress, and we sentiment is poor in some ways. but with housing stabilizing, probably going back up, with the amount of cash on the side, blessings of the energy

situation that none of us anticipated, but somehow it's just -- it's just happened, and low interest rates, i think the u.s. environment is very good. >> but right before we start this interview, becky was talking about the futures. we saw the green arrows. and you said the market's going to keep going up. what's happening? >> i think if you ask a pool of investors what you would like to have happen? would you like the equity markets to go down or go up over the next few days i think everybody would kind of like it to go down so they can get in. in other words the market has gone up, with people being underinvested. don't forget, look at how much money went into fixed income. at very -- very low interest rates. there will be a turn. the turn in interest rates and equities, won't necessarily happen when the fed changes interest rate policy. it will happen when the market decides the fed will have to change interest policy, which is going to happen a lot soon. i'm not saying -- >> happen a loot sooner? >> well it will happen sooner than the official, i remember in earlier cycles, sometimes, you know, we get the fed --

sometimes the fed will be ratifying what's going on in the market. but if you had two, couple of good numbers in a row, and everybody would be looking ahead, i think it will get awfully squeamish about lending money out at today's low interest rates. and would start to say, you know, when growth comes back, i really should be in equity. you know, let's face it, you have central banks around the world who are trying to penalize you for being in cash. and reward you for being in assets by inflating the price of assets. >> joe has a question for you. i don't know if you have your ifb in. >> it's in my ear. i didn't know it was an ifb. >> that's what they call it. ifb. >> it means something weird. >> interfeedback -- i don't even know what it stands for. >> i didn't even want to ask. >> it's not an iud. relax. >> i'm just not -- i'm just not going to pull it out from the other ear. >> yeah, exactly. don't show us that. i want to shift gears a little, lloyd, and ask you kind of a political question. you, during the fiscal cliff

talks, you exited from the talks a couple of times and said what the president is proposing is reasonable and taxes should go up and i'm willing to pay, and a lot of people used you as a corporate spokesperson for saying that you're on board with what happened. so the deal that finally came out, which was mostly just raising taxes, not a whole lot on spending cuts, are you disappointed that maybe you were used to get a deal done which basically just raised taxes, wouldn't you have liked that combined with some spending cuts? >> don't -- >> there's a lot in the question, let me just say from what i think, but what i said. i thought that this wouldn't be the moment in time when you should have the lowest revenue as a percentage of gdp. i thought that revenue had to go up. i think spending has to go down. and i said that. and if spending is going to go up, i mean, my point of view, i think it could be a progressive system. i said the tax rate, have to

function in a way that we expand wealth, but i think you can reasonably want to allocate it in a progressive kind of way. that's my point of view. i said that. that was taken, as it should have been, to mean higher taxes. didn't mean just higher taxes. it meant higher taxes and less spending and i was specific about that. my ear is attuned for hearing more cuts in spending. i am not hearing it. i would be disappointed if this is all there was. as far as a deal was concerned, i think that that was a stopgap, and i think it was presented like that -- as that. as part of a series of more negotiations that were to follow and more changes, both possibly on the taxing side but certainly on the expenditure side. i'm dying to hear the -- to hear the expenditure and less spending side. i agree with that. but i'm not -- i'm not -- i wouldn't use the term disappointed until this whole process is over. i don't think we're in the -- i

don't think we're in the seventh inning of this process. >> yeah. >> because at this point, we're -- >> at this point we're at, you know, simpson-bowles and rivlin domenici and the gang of all of these the idea was to get rid of a lot of the deductions and loopholes, so that you could broaden the base with a lower rate. now that's over. the rates have gone up. now we're going to hear about closing all the same loopholes so we're not going to get to where we were. so the genie is already out of the bottle in terms of higher rates and so i don't know whether it can ever get to where simpson-bowles wanted it. >> i don't think that simpson-bowles, you know, simpson-bowles, even when i talked about simpson-bowles, you know, i think, was magnificent, did very important work, that was a directionally right thing. i don't think anybody would have agreed to simpson-bowles necessarily just point by point, but certainly directionally, we have to cut -- we have to cut spending, and we have to obviously through tax

expenditures is a form of spending. i can't believe -- you told me we were done and this was all there was then i would have no problem expressing disappointment. >> do you believe that washington is holding back the economy? if you believe there's going to be 2% growth in the u.s., do you think if washington got their act together, jamie diamond has said we'd have explosive growth, 4%, things like that. are you there? >> no. the reason why washington is so divided, frankly, is because the country is so divided. you know, listen, if everybody did exactly what i wanted them to do the world would be a better place and everyone thinks that. it's very hard to come. everybody should agree there should be cuts sm spending. until you're a philanthropy and you want to cut the charitable deduction, until your income is related to housing and you want to cut the home deduction, if you live in a high-tax state like i do, you want to cut down the state -- you know, you want to cut the deductions until they go after the state tax deduction. the stuff is hard because it's hard. i think we have to get together and hack through this. i did not think it would be done by now. i would be very disappointed if somebody told me that we don't

have to cut spending now. i would feel that there was some manipulation getting people to do the revenue side first in anticipation of the spending cut side later. that would be a disappointment. i have no reason to think that's the case. >> lloyd, we're going to slip in a quick break. talk a lot about goldman sachs and what's going on on wall street when we return. in the meantime i'm going to send it back to you. >> we're heading to a break right now. before we do go, take a look at shares of halliburton. that company is coming out with earnings of 63 cents a share. three cents better than the street was expecting. revenue also coming in above expectations and that stock is up by more than 3%. just one of a number of stocks that had better than expected earnings today. dow component procter & gamble in that, along with kimberly-clark. ♪

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but sleep train's huge year end clearance sale ends sunday. get beautyrest, posturepedic, even tempur-pedic mattress sets at low clearance prices. save even more on floor samples, demonstrators, and closeout inventory. plus, free same-day delivery, set-up, and removal of your old set. don't wait, sleep train's year end clearance sale ends sunday. superior service, best selection, lowest price, guaranteed. ♪ sleep train ♪ your ticket to a better night's sleep ♪ all right let's get back to andrew and the goldman sachs ceo lloyd blankfein standing by at the world economic forum in davos. andrew? >> thank you, becky. lloyd, we were talking a little bit about washington. one of the things that did happen in washington just yesterday or actually earlier in the week was mary jo white being named head of the s.e.c. you went through a lot of the

world of regulations over the past couple years. do you know mary jo? >> no, i don't know her. she has terrific reputation. >> can't say anything bad now? >> i couldn't think of anything bad to say. how's that for not saying anything bad? she had a great reputation as a prosecutor. >> jack lew and the rest of the team. you know those guys? >> i know jack lew. jack lew is always very gracious with white house chiefs of staff, even in days when there was some discomfort between the business side, and the street, i would always -- i would call up, and have great conversations and make the rounds. >> the administration's changed its approach to business and to wall street, or no? >> they reached out. i mean, i have to -- they've done it. >> but are they listing or reaching out to placate? >> i'll let you know after i watch -- after i observe what they do. i think they're -- look, who knows -- at the point at which everybody's pounding and saying, you know, you have to engage with business, i think it's a

little bit harsh when they do engage with business to turn around and say, ah-ha, they're engaging with business. they don't really mean it. let's see. i appreciate the fact that they're engaging. by the way, they're engaging a lot. follow-up phone calls, conferences, they respond to questions. if they call you up after you made the question and ask you if you have the answer. anyway, the devil is always -- >> your sense on the next steps of regulation, the implementation of dodd-frank? as i said before jamie diamond was here, almost defiant, and still really pushing and suggesting that things have been overdone in washington. >> yeah. i think the pendulum, look, the trauma was very great and it was very recent. if you think back, you know, not from recall, but what you read about the depression, you know, that was in 1929, happened with the securities and exchange act up 33 four years later. 34, 35, 37, 39, 40, and so it came out later, and there were adjustments.

i think the act as it came out, you know, basically reduced risk and problems because don't forget, the trauma we never want to happen again but it did it at the cost of probably impeding the economy. >> is jamie wrong to be so aggressive about this or are you in the same position to do that? >> you know, i think maybe different personalities. >> let's talk goldman sachs real quick. your sense in terms of the next year. is this something that you can keep up? >> listen, i could get in -- you know, we had a slight under 1% quarter. >> when that becomes a blowout quarter i'll have to re-evaluate. >> -- thinking about the economy? >> so now what was the question? >> i think the question is, you're looking at to 2013, talking about recovery in equities and things like that. i assume that -- >> i'm optimistic. look our businesses, our

business in particular, we're an investment bank. the things we do, all the things we do correlate with growth. we advise people on acquisitions when they have the confidence to acquire things. we finance them when they go out and do things. we manage risky assets, which they only put -- people only put money in risky assets when they're confident. and so i think the economies are starting to grow and i think the cycle going to be long. so frankly i'm optimistic. >> you've always said look all the issues on wall street are cyclical not secular. >> not all the issues. i think the most important thing that i as ceo has to do in strategy is decide what's cyclical and what's secular. let me tell you the rise of emerging markets, that's secular. technology, and the change in business, that's secular. the volumes, when people aren't doing anything, because we're going through a recessionary period, that's cyclical. so if you over -- if you don't respect the cyclical and you get killed you'll still be killed when the cycle changes. but if you go too far you won't

be there to enjoy the upside when the cycle shifts. >> compensation -- >> discuss me. it fell out of my ear. >> the ifb fell out of your ear. as i'm asking you a question. i'm asking you -- asking you this question -- >> i just wanted to explain what was going on here. >> that's okay. >> just wanted to tsh- >> okay. >> how -- >> look younger. >> thank you. i was going to ask a hard question. you're paid $19 million last year. how did you arrive at that number? did that number make sense in the grand scheme of things? all the conversations that people were having about compensation on wall street, what do you really -- >> let me tell you. let me say the obvious i have a compensation. the round number of whatever it was that came out of a compensation committee that's advised by consultants that go out and canvass and look at these things and look at the forms over time and time and yada yada. >> those measures make sense to you now. you look at the whole system, you say that all those

comparisons, people say i have a consultant so you're measuring against everybody else. >> in the context of what nobel laureates and physics make it makes no sense at all. in the context of people in finance i understand what one has to do to draw talent to our part of the industry. >> would you leave the firm if you were paid less? >> not today. no. >> okay. >> no, no, listen, obviously listen, i've been in this firm for 30 years. as a partner in the firm for longer than -- for longer than i've been an employee of the firm. i, most of my interest in going with goldman sachs comes from trading in my partnership interest for stock. so, i'm -- my -- i'm more of a shareholder than an employee. >> okay. richard bernstein back in the studio has got a question for you now that your ifb is working. >> lloyd, i'd like to ask you a question about the corporate sector, if we can get away from the public sector for a second. you mentioned before very briefly that corporate balance sheets are flush with cash, that says to me that they've been

underinvesting for future growth. meanwhile, small companies in the united states, although most people don't believe this, have one of the fastest projected growth rates in the world right now. is it possible that with these clean balance sheets and fast growth among smaller companies we can see an m&a wave coming as this veil of uncertainty is removed? >> not only could we, i'll go further and say should we. we should. the conditions are quite right, in fact, i'd say, it's kind of, i can't really explain why it hasn't come up yet. listen, i'll add to it the low level of interest rates. the fact that very low level of interest rates. the fact that industries are consolidating. a lot of opportunities overseas. and i can tell you, everybody in his own industry tracks a lot of stuff. we track m&a as a percentage of gdp. it's at a much lower level than we should be at this part of the cycle, this part of the recovery, and i'm kind of at a

loss to explain why. i say the obvious thing, and there's some truth to it, is a lot of disagreement on what values are. let me tell you how uncertainty plays in. would you buy -- how enthusiastic would you be about buying a house if you didn't know your mortgage was going to be deductible, what would you pay for that house if you were trying to figure out what you can afford in terms of mortgage payments? you'd wait until all those issues got resolved and so you'd sit down and say i want to buy a house, i can afford to buy a house because i'm going to rate because the price might drop by 20%. one of the things we're seeing on the corporate side as well is a lot of disagreement on what values are pending the resolution of the issues that are outstanding. >> becky also has a question for you. >> lloyd, when you talk about all the uncertainty, and all the concerns that you have out there, when you start thinking about these very low rates and whether or not the fed is going to be able to anticipate when inflation returns and pull back the balance sheet for the fed is now over $3 trillion. where is where does that rate in

terms of the concerns that you think about down the road? >> listen, i think it's a risk, look, i think, i think the decision that was made to take every step to make sure we didn't slip into deflation was prudent. i think somebody asked me if it more likely that we're going to have inflationary than defligsary pressures, i'd say yes. but that's not the end of the inquiry. it's what's the consequences of inflationary pressures versus the consequence of deflation and you look over at japan and there's a playbook on inflation. there's no real playbook on deflation. so i think they made the right judgment and they're definitely taking risks. and so, let me tell you about it, i know the fed is focused on that, and you know, i think it's risky, but i think they are trying to present other risks from evolving. one other thing in the short-term, becky, aside from what the fed has to do, we talk about the equity market going up. at some point when people start to get upbeat about the economy interest rates won't stay there. there's been massive refinancing, a lot of get hassan issued. that's been terrific for the companies that have issued them.

and they're trying to get in under the wire to do more and more. what about the portfolios into which those bonds and those securities and those loans have been going? i think one, you know, has to be cautious about that and look forward and make sure that people are taking appropriate risk view of portfolios that have a lot of long-term debt instruments, where it's very low level of interest rates have been locked in for five years and ten years. >> possible bond bubble. joe has got a question as well. >> austan, do you have one? >> i have a comment before we go, that's all. but you go ahead, austan. >> austan goolsbee here. good to see you. goldman sachs, small businesses, you've got a lot of observation of small business sector. we kind of passed over the issue, small business had a pretty tough three or four years in financing, in performance. >> yeah. >> do you agree with richard's premise that actually the next couple of years, do you see small business being one of the engines of growth or do you think they're still going to be

lagging? >> you know, it -- it should be, but i always thought that people now separate and make economies and small business larger, this one does this now. to me small business really in a lot of ways feeds off the success and the spending of large business. you know, we built our big tower a few years ago in lower manhattan and spent a lot of money, a couple of billion dollars building a very big building. and i could tell you there was a lot of growth in small businesses around the site where we were building our building and then when we move d 6,000 o 7,000 people into that building you couldn't believe the number of shops and services that grew up. if i were doing the measurement i would say small businesses in my neighborhood added more employees than goldman sachs. but i can tell you those small businesses wouldn't have added those business unless goldman sachs was competent enough to make a big expenditure.

>> here's my -- >> two quickies and then back to joe. china. haven't talked about china. talked about -- >> where did the time go? >> i know we're going to have to go in a minute. give me your perspective on china where we are and specifically about the new leadership. >> i don't know the new leadership. i'm optimistic look when a company goes public for the very first time you usually are reasonably sure that they prepared for it, and your somehow believe that the first couple of quarters are in the bag. i'm hoping that this new leadership that knew they were going to get their jobs for a long time that are in position but don't have the -- are not going to get into office and start the process of figuring out what to do. i think they have a program ready to go, and i'm hoping it's reformist. finally, tim geithner's last day is today. i assume his office extension ready for money? >> say again? >> i assume you have a office ready for him on monday. ? >> oh, at goldman sachs the firm he never worked at --

>> that's where i was going for this. >> yes, yes. i don't know. >> it's been lost. >> i think -- i think you know, you'll never know about, you know, history will right about this thing but i think in his two jobs, over the course of the financial crisis i think tim did an excellent job. >> lloyd i like the way you use that what did you say polemic in that question but andrew asked you about your $19 million you did not mention that there was a polemic in that question. i want to give you just a little tip on how to answer that. say that that it's unfortunate that that you're paid at a 50% discount to david letterman and a lefty with a good fastball, i mean maybe you'll never be as productive in society, you know, as telling jokes on a late night, but say it loud and say it proud. lloyd, would you please? don't be embarrassed. you deserve every penny because you can get and that's what the market pays you. don't let sorkin push you around. >> mr. speaker i'd like to give

the rest of my time to joe kernen. >> and finally i'll end with not andrew not everyone watches downton abbey but do you remember when matthew and mary, they were proposing, it was the same kind of slow, that i saw with you guys, when you were talking, and i couldn't help but think, this is, this is very similar to that, only it was real in this case. >> you know, i saw the -- i saw the -- i saw the intern dropping the snowflakes from the roof above us, but i am very impressed -- i'm very impressed with cnbc spared no expense in getting that mountain there. >> right. >> and it looked really nice. >> anyway great -- >> lloyd blankfein, thank you very much. thank you joe. >> thanks, guys. >> a lot of fun. we'll try to do this in new york, as well. >> thank you. >> back to you guys. >> did he say he updated geithner's office? they remodeled it. i'm sure they've done some work on getting -- >> there. >> -- i'm not a key -- at least

you're off of the bls commission. >> you know what? you weren't -- >> you -- >> thank you for reminding him. >> you were proven wrong. >> you admit that. you were proven wrong. >> i was not -- i never -- >> the unemployment rate rose in the final survey right before the election. >> -- swimmingly. we're at 8%. we're really clicking on all cylinders. >> exactly my point. how did you attribute the conspiracy that it was a smrs -- >> how much lower can you go on this, keep it going this way, how much lower can you go on the participation rate? can you go to 60? will you -- >> how old the population is. >> goldman -- >> your friends, whether they -- >> all right coming up we'll have more from austan goolsbee and there are plenty of other conspiracies that define as well. economic adviser to president obama, and rick bernstein ceo of rick bernstein advisers plus tim geithner's last day as you just heard as treasury secretary we're going to talk about the challenges ahead for his

successor. jack lew. >> our interests as a nation depend critically on the broader economic health of the world economy. we're very optimistic they're going to have these firms emerge stronger without government assistance going forward, because they've undertaken very, very dramatic restructuring. to grow, we have to boost our social media visibility. more "likes." more tweets. so, beginning today, my son brock and his whole team will be our new senior social media strategists. any questions? since we make radiator valves wouldn't it be better if we just let fedex help us to expand to new markets? hmm gotta admit that's better than a few "likes." i don't have the door code. who's that? he won a contest online to be ceo for the day. how am i supposed to run a business here

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welcome back, everybody. we are still arguing around the table here and watching earnings central. some of the stocks that we've been keeping an eye on include microsoft. microsoft came out late last night with earnings that came in an adjusted 76 cents a share on $21.4 billion in revenue. the company says that its new windows 8 operating system is off to a good start and that it's planning to launch a new version of office this spring. at&t another dow component reporting fourth quarter loss, but when you stripped out the items related to pension costs and superstorm sandy the telecom giant earned 44 cents a share, which was a penny below what the street was expecting. revenue and subscriber growth were better than expected and the company sold 8.6 million iphones. bad news overed short term because they subsidize with better news over the long-term because they have those customers around. starbucks profits rose by 14% matching forecast. revenue did come in a little shy

of estimates. same-store sales were up by 6% and that was boosted by continued growth in the u.s. and asia. procter & gamble stock beat expectations by 11 cents so that dow component is higher as well. if you are planning on mailing anything next week buy stamps today or tomorrow. on sunday the price of a first class stamp increase to 46 cents. u.s. postal service is also introducing a new global forever stamp for $1.10 for worldwide first class mail. coming up, saying farewell to treasury secretary tim geithner. we're going to talk geithner's legacy. and the challenges for his successor, jack lew. >> timothy geithner as secretary of treasury. tim geithner offers not just extensive experience shaping economic policy and managing financial markets, he also has an unparalleled understanding of our current economic crisis. >> obama will nominate timothy geithner as the next treasury secretary. >> the ayes are 60, the nays are

34. and the nomination is confirmed. >> i, timothy f. geithner -- i pledge all of my ability to helping meet that challenge and to restore to all americans the promise of a better future.

they've shown a stunning lack of knowledge about basic u.s. budget math. exactly the wrong conclusion from this budget agreement. i believe in this president, john. i believe in what he's trying to do for the country. i love my work and i think when the president asks you to serve you have to do it. >> i don't think that's a fair description of your plan. >> actually i do. but we can go back and forth on this. >> we're in much stronger shape than we were 6, 9, 12, 18 month. >> it would be a terrible mistake economically for the united states for us to lurch prematurely to extreme austerity to severe austerity. that would undo a huge amount of the progress we've made repairing the damage from the crisis. >> there's no chance that the major countries of europe will let their institutions be at risk in the eyes of the market. there is not a chance. >> if congress, or washington, is incapable of acting, then

policy will be damaging the growth. >> is the administration prepared to go over the fiscal cliff? >> oh, absolutely. >> today is tim geithner's last day as treasury secretary. let's get back to guest host austan goolsbee for more on the challenges ahead for incoming secretary jack lew. i was more interested in what kind of scratch is tim going to be able to pull down -- what is the name of your new firm? >> 32 advisers. >> so what can he look at if he really wants -- >> i hope -- >> if he really wants to cash in. >> -- to me, which is not a lot. but -- >> you're making less -- you're on the record making less -- >> i -- it wasn't as good of a year for me as it was. >> okay so we talked a little bit off camer jack lew. so your, you point, is that he's the right guy, at the right time -- >> for this moment. i think what this moment is obvious the most dominant issues

of 2013 are going to be budget, tax reform and that kind of stuff. and this is a -- you know one of the greatest budget guys that there has ever been. >> but republicans stop even talking to him. >> but they got mad at him, because they couldn't get their way. i understand that. >> right. >> so now that we're in -- >> in a position -- >> okay now that we're in a position where we want to rise above, there's been a campaign to talk about how we want the two sides -- >> that was your campaign. i wouldn't say that was -- >> obvious -- >> it's obvious your guys have not wanted to rise above, either. but now, with the selection of jack lew does this look like the president is throwing out an olive branch to republicans? >> i do. i actually do. it could have been a lot worse. let's put it that way. it could have been a lot worse. jack lew is not -- he has a long history in washington, and he's not a guy who's a massively partisan figure. he isn't. he's a negotiator type. he was there when tip o'neill

did the negotiation with ronald reagan back in the day. in the moment of the budget negotiations they were mad at jack lew because jack lew the administration kind of held the negotiation upper hand this in this one. but i think if you go talk to anybody in congress, they're very familiar with jack, they know that he's a good negotiator, he's a straight shooter. he's not going to be out pulling things out into the public that are better off in the negotiations, and he's -- he's going to be fair about it. >> he's not going to -- >> he's not going to necessary up the, you know, the whole administration not having any private sector experience. he's going to keep that -- keep that private sector -- >> what are you talking about. >> he's a technocrat. he's been a technocrat for 30 years. tip o'neill, when was tip o'neill around? that was in the '80s. >> in the '80s. >> but when was he in the private sector? >> he was in the private -- >> he's not going to taint the

administration with any private sector experience. >> he has private sector experience. what are you talking about? >> he worked at a bank. >> yeah, he worked at a bank. >> see. -- >> he has some private sector experience. >> probably more than anyone else, actually. >> i was in business school. i was a business guy. >> i think he's -- you should talk to him. he's a decent guy. he's a straight shooter. and i think -- i think it would be good. >> i guess the whole question is that we're wondering about is two ways of approaching our public right now. we bring tax revenues up to where spending is, or we go, you know, take tax revenues exactly where they are and spending down to where they meet and that's what we're arguing about. >> see, i think there's three approaches. and the third is, let's do some above. >> but that's where we're arguing about where to get there. and different selections. >> yeah, that's correct. >> different selections let you

see where one or the other side are going to come down and i would say that this comes down on, we're going to try and pay for what we're already doing. >> i don't agree, when you is ai that if you look at the budget negotiations that jack lew's taken part in over the course of his life, i mean he was the omb director under clinton, he was there in those negotiations in '94 as well as tip o'neill as well as this recent series and in all of those, if you take them collectively, they have all entailed some revenue, some cuts, and did it in -- i'm not going to use the word balanced because i know you hate that word. let's call it a comprehensive -- they've done it in a comprehensive way not an unbalanced way. >> right. >> put it that way. not a 100% cuts way. >> i think it is a sign of that. but i don't think it's a sign that they want -- >> well, it's going to get interesting. three or four months with the debt ceiling. so the sequester is the next thing that republicans -- >> yes, sequester and the budget. and, i don't know what richard things, but my view was --

>> hasn't been a budget in four years -- >> there has been a budget. not a stand-alone budget. they just keep continuing the budget that already exists. >> is that a problem? >> it can be a problem. >> how do you -- >> i think it was -- i blame partisanship in washington. i don't think that's any one person's fault by any means. i think not making the fight about the debt ceiling, which has the unfortunate downside that if you mess it up, the u.s. government defaults, and it's a financial catastrophe, this was a sign of maturity. i think on the republicans' part that let's make it about the budget. so the budget is now going to come to so-called continuing resolution. they're going to have to have a fight about a government shutdown. this is what they should be arguing about. what does the government spend money on? what should it spend money on? how much revenue should be coming in? let's make the argument about that, not about whether the government should default. >> you just -- >> -- i agree with him. >> no, i -- i just think

everybody's too -- i mean the question i would ask austan i know we're going to break but i'd ask austan people are very bearish on growth. what if they're wrong and trend growth isn't 1.5 to 2, it's 2.5 to 3 or 3.5 to 4. what does that do to this discussion? >> thanks. we are -- >> i think people are going to be surprised. >> let's pick up on that note. richard bernstein, austan goolsbee are both with us for the rest of the program. joe? >> all right. coming up several stocks on the move this morning. we'll tell you what to watch next. and all next week on "squawk," leading up to the super bowl we'll be talking to nfl owners as part of our "squawk" owners box series. the texans, the dolphins, the ceo of the packers, all join us on set. be with fidelity, but we can still help you see your big picture. with the fidelity guided portfolio summary, you choose which accounts to track and use fidelity's analytics to spot trends, gain insights, and figure out what you want to do next. all in one place.

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welcome back, everybody. it is still the midst of earnings season. in some of that news this morning, dow component procter & gamble came in with earnings of $1.22 a share. that was 11 cents better than the street was expected. revenue came in slightly higher than the street expected as well. and earlier we spoke to procter & gamble cfo jon moeller. >> the strong quarter has allowed us to improve our outlook for the year for the top line, bottom line and share repurchase while, and this is important, at the same time strengthening our plans in the back half of the year. >> also, we'll be watching shares of cisco today. the networking giant announcing that it is selling its home networking business, includings link us is brand to bell kin. that was one of the last

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welcome back, everybody. let's get down to the new york stock exchange. jim cramer joins us with more. jim, we've been watching shares of proctor & gamble and kimberly and clark. what's your take on the numbers? >> we keep saying there's much more work to be done, talking about organic growth, there's also 20 new products coming up. there's much to like. i think it's an excellent report. wow, stock's not going to stop here. i think mcdonald's really gotten it together. >> i know you're running around down there trying to get into the building, but i don't know if you heard any of the lloyd blank fine -- >> yes, i did. time to get loud, time to get proud. joe is absolutely right. chip kelly signs with the eagles. he makes more money than lloyd. is that right? i don't know. chip kelly's never even been to the pros. >> if it's a market, if both places are markets, jim, i think

about blankfein, he had them set up to not go out of the market when the market imploded. they had risk control, so did jamie dimon, that differentiated those guys. why is that not worth something? there's a value to society. you tell me a great ceo is not worth as much as david letterman? >> i thought it was great. i'm litening and thinking, that a-rod, he was over -- i was going through my mind, all the overpaid athletes versus a guy who saved this country. >> and bull lek makes $20 million a movie, jim. >> does she really? wow. really? how much did brady make to get beaten by the ravens up in new england? you've got the nfl owners next week. i think you should ask every one of them if their player did as much for their teams as lloyd did for goldman. >> that's what i was telling them. stop -- you know, sorkin was beating him up.

>> yeah, you know -- >> looked like lloyd was -- >> the workers should mean the production. >> it's all about fairness. >> and you came up with the rap that, you did better than everybody else, but you're not doing as good as letterman. >> years of paying them. >> i hope this isn't -- >> not enough. it's not enough. but if the price of oil goes up, and that has nothing to do with an oil company ceo, i don't see why that leads them to be paid. likewise, it's not the case now, but during the crisis, the government saved these guys' butts. and that returned them to profitability. and then their pay went up based on their profitability. >> all i'm trying to -- >> it's a case by case basis. >> lloyd denies that. i'm with you, though, austin, i

believe that. but at the same time, now it's in the past. they're making a lot of money. they're doing better. two guys downgraded goldman. i think they're dead wrong. i wish lloyd had talked a little more about that. >> jim, thank you. see you in a few minutes. >> thank you. final thoughts when we come back and last word from davos. stick around.